Economic growth is not “natural”: re-thinking current economic challenges

Since the late 1980s, the World Bank has been defending a policy agenda that reinforces the free market model of endogenous economic growth where human capital plays an outstanding role since the acquisition of abilities would increase the productivity levels, and as a result, the income levels. In the model of endogenous growth, the evolution of the level of product per worker depends on the increase of productivity. Regarding the human capital model, the long run growth in each country is analysed considering the particular features of infrastructure and human capital. The divergences verified in the levels of product per worker among different countries can be attributed to the abilities accumulated by labour and to the infrastructure of the economies. The emergence and diffusion of the model of endogenous growth reflected the intellectual victory of the ideas about the supremacy of the competitive economic order and the rejection of interventionism to promote economic growth and social justice. Considering the relevant economic outcomes of this intellectual victory, the main question that arises in the context of economics education is: What is at stake in the economic discourse that privileges the economic competitive order as the pillar of economic growth?

The competitive order, as a necessary one, is the pillar of Hayek’s theoretical construction. Hayek’s economic discourse turns out to “naturalize” the competitive market as a superior arrangement. However, the “naturalization” of the competitive market – by considering it a “natural” arrangement – is overwhelmed by political interests that play a crucial role in the economic and political decision procedures, and in the institutional management of such issues.

Taking into account a real-world approach to economic growth, it is relevant to highlight the ideas of Keynes, Minsky, Kalecki, Rifkin in order to re-think current economic growth challenges

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Participants in the ‘competitive market’ are continually considering ways of reducing or eliminating the impact of competition on their business through contrived product differentiation, complex ambiguous pricing or just plain consumption of rivals. The so-called free market deserves a psycho – sociological methodology to free it from unintentional ideological assumptions in conventional economics.

Free markets are only as free as the application of good corporate governance makes them. It is also clear that because of the darker side of human nature, a good overall regulation structure, focussing not on unnecessary red tape, but on collusion, price fixing and blatant exploitation of poorly educated consumers, is vital to the efficient workings of a market driven free enterprise economy. History has proved that despite the many inefficiencies of human capital, free enterprise remains the best model to optimise wealth creation for all. However, as Minsky pointed out, an important focus should be on the financial sector of the economy where too many obscure financial instruments; (derivatives), will derail any stable economy and render it unstable as a matter of course.

If by natural you are referring to things and events that are innate, part of the natural order of the world then I agree that economic growth is not natural. But that realization is neither surprising nor new. A cursory view of human history dispels that notion. Human economic, political, and cultural life has grown and expanded over time, but has also declined and suffered failures. Anyone with even the least knowledge of that history would never propose a theory for economic life that contends unending growth. It’s just silly. And on top of that it is unscientific, since the only way it can survive is to reject comparisons to observational data. This is the worst sort of anti-scientific ideology, since it shapes human human thought and institutions to a way of life that is not and can never be consistent with the actual way human communities are organized. In other words, by this theory economists reject human life and human culture. Replacing it with dangerous and deceptive fictional accounts. Why would anyone do this? For fame, wealth, and influence over society are the only reasons I can
propose. Or out of sheer ignorance. But it’s hard to believe anyone is that ignorant, unless willfully so.

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